How much does it cost to build a Falcon

[ford man xf]

Was just curious does anybody know how much roughly it takes Ford Australia to make even just a base model Falcon, curious to know exactly how much money Ford makes off each car, it couldnt be that much really?

[flappist]

Well if they get all their parts of "Genuine Ford Spares" about $100,000,000.......

[Luke Plaizier]

I would take a guess that material costs and labour are probably around $7k to $8k per car, no matter what is made. With FPV the additional handling would make more of a difference.

Large cars don't cost that much more to R&D and build than small cars, which is why it is still only just financally viable to do so with such a small build run in Australia. Other costs not included in that estimate include R&D, Marketting (including motorsport, advertising, free cars in competitions etc), Administration and the like.

Then on top of that, I dare you to go to a dealer principle and ask what their markup is - my guess would be around 20 to 25%.


Lukeyson

[4Vman]

At the moment it costs them money to make each car...
As a guide a few years ago Toyota bragged they made about $2000 (on average) profit from each vehicle made..

[ford man xf]

Thanks for the info, so how does the sales all work then, Ford sells the cars to the dealership at a set price, then the dealerships add thier markup to that price, or does Ford only get money for the ones that the dealerships sell?

$7000 to $8000 just seems too cheap to me, the steel used in the car alone would cost at least $1000 on its own?

[Iggypoppin']

Buying steel in bulk obviously helps. Having the panel machines manufactured or altered for new panel designs would cost a bit I'd imagine?

[4Vman]

Originally Posted by ford man xf

Thanks for the info, so how does the sales all work then, Ford sells the cars to the dealership at a set price, then the dealerships add thier markup to that price, or does Ford only get money for the ones that the dealerships sell?

$7000 to $8000 just seems too cheap to me, the steel used in the car alone would cost at least $1000 on its own?

Id say take 20% off the RRP to get to the total cost of manufacture.
So on a 35K Falcon at list price it probably cost Ford 28K to make it...

[ford man xf]

Originally Posted by 4Vman

Id say take 20% off the RRP to get to the total cost of manufacture.
So on a 35K Falcon at list price it probably cost Ford 28K to make it...

How on earth do car makers make money then, considering the millions spent just developing the car, for example the FG model (which is heavily based on the BA/BF) from memory cost $450-$500 to develop and the VE Commodore which was a clean sheet design supossedly cost $1 billion they would have to include a heavy development cost into the price.

I know Toyota operate on a volume sales base, selling heaps of cars at near cost to make a small profit.

[gtfpv]

i'm no economist , but my guess is that the cost of the car would depend on how many are made and sold . example to make one car only the cost would be enormous , to make 10 000 cheaper then 1 000 000 cheaper as differant setups would be made to suit output.and labour employment dividends would vary for example imagine, 100 people building the cars in said time versus 1000 people building the cars in said time . then of course a sales prediction run would have to be pretty accurate before hand .
that's a guess though with my limited knowledge on the matter, interesting topic though , i too would like a factual cost if anyone has any.

[Eaturbo]

Originally Posted by ford man xf

How on earth do car makers make money then, considering the millions spent just developing the car, for example the FG model (which is heavily based on the BA/BF) from memory cost $450-$500 to develop and the VE Commodore which was a clean sheet design supossedly cost $1 billion they would have to include a heavy development cost into the price.

I know Toyota operate on a volume sales base, selling heaps of cars at near cost to make a small profit.

Do you not read the paper or watch TV, There not making money they were all going Broke. Dealers make more than the manufacturer which is wrong but if you dont give the dealer incentive they won't sell your product. Have you ever seen a poor motor dealer, most are multi millionairs. Problem is that the manufacturers have not raised there prices in 10 years or more. Do you know anything else that has stayed the same price for 10 years or more.

[ford man xf]

Originally Posted by Eaturbo

Do you not read the paper or watch TV, There not making money they were all going Broke. Dealers make more than the manufacturer which is wrong but if you dont give the dealer incentive they won't sell your product. Have you ever seen a poor motor dealer, most are multi millionairs. Problem is that the manufacturers have not raised there prices in 10 years or more. Do you know anything else that has stayed the same price for 10 years or more.

I realise currently they are not making money, but in the good days of years gone by it costs so much to make the car and the development cost of even just upgrading an exisiting model is massive.

[Dave R]

I've read that a base Commodore costs in the mid to high teens to manufacture, I'd imagine this wouldn't be too different for Falcon. Then the manufacturer would sell them with a decent margin to the dealer network, who would then mark it up again for their own margins. Once you factor in the R&D costs, marketing etc etc the manufacturer's margin would drop severely!

[FPV+fteT3]

The manufacturer can write off a lot of development costs and set up costs thru taxation in the same way small business can write off costs associated with making a product or supplying a service.

[ratter]

Dealerships can make next to no money if you have bargained them down a bit, that's why they try to sell you finance and aftercare products to get some profit.

[Fordman1]

Ford Australia aren't making money at the moment - maybe next year ?

The best they are doing is breaking even right now.

I doubt it costs $18,000 to make a Falcon..... otherwise FoA would be making about a $15 Million profit per month even on the reduced volumes from this year vs the line rate of 2007 !

Remember the profits even when 80,000 vehicles were being built was less than $200 Million (a couple of years ago), not $500 to 600 Million.

I think it is probably closer to $27,000 inc R&D, loan repayments, etc. (Depending on the model of course).

Higher spec models = more profit also.

[4Vman]

Originally Posted by Barraxr8

Ford Australia aren't making money at the moment - maybe next year ?

The best they are doing is breaking even right now.

I doubt it costs $18,000 to make a Falcon..... otherwise FoA would be making about a $15 Million profit per month even on the reduced volumes from this year vs the line rate of 2007 !

Remember the profits even when 80,000 vehicles were being built was less than $200 Million (a couple of years ago), not $500 to 600 Million.

I think it is probably closer to $27,000 inc R&D, loan repayments, etc. (Depending on the model of course).

Higher spec models = more profit also.

That's pretty much how i see it.

[naddis01]

Originally Posted by Eaturbo

Do you know anything else that has stayed the same price for 10 years or more.

You obviously have nothing to do with agriculture. The prices that farmers receive for many commodities are at the same levels that they were around 10 to 20 years ago.

[Joe5619]

Originally Posted by FPV+fteT3

The manufacturer can write off a lot of development costs and set up costs thru taxation in the same way small business can write off costs associated with making a product or supplying a service.

This world "write off" is used far to much when talking about businesses I think.. A "write off" is not free money!!

FYI: you only pay tax if you make a profit, Ford AU have made losses for years now & would not have paid tax for years now!

[cool65]

Tooling for all the plastic parts cost plenty - from around 30k to well over 100k for injection molding dies- so payback needs to be amortized over the life of the vehicle (a plus for suppliers is the 10 years that OE spares needs to happen) and, if possible aftermarket, so the parts that wear, are the profitable parts.
For example a fanbelt for vn v6 was sold to holden at around $5.80, with holden spares selling them for $45.00 and different part number but same product sold in kmart for $36. The same belt went on to the VP,VR & VS V6 so it was a win for the supplier and holden by not changing parts on every model.
Also the aftermarket trade has to be taken into account after OE sales and before YOU the consumer, who in the end, takes it up the kyber pass so everyone else makes some money

[Eu-GenixX]

i wonder if Ford or Holden etc sold their parts cheaper.. would they sell more of them and make more money?

[FPV+fteT3]

Originally Posted by Joe5619

This world "write off" is used far to much when talking about businesses I think.. A "write off" is not free money!!

FYI: you only pay tax if you make a profit, Ford AU have made losses for years now & would not have paid tax for years now!

FYI: They have great accountants and probably get paid a bonus for each year they dont show a profit on the books this doesn't mean they dont make money. Losses on paper thru depreciation,amoritisation,GST,R&D etc all companies minimise and claim all they are entitled to and FOA would be no different.

[Gobes32]

To all the people who think Ford are screwing over the ATO, just remember. They still have 2000 employees each paying an average 10k in tax each year......

[Yellow_Festiva]

Originally Posted by Eu-GenixX

i wonder if Ford or Holden etc sold their parts cheaper.. would they sell more of them and make more money?

Depends. If you sold more of an item at a lower price, you may end up making the same amount as less sales on a more costly item.

Like others have already said, what an item costs is relative to how many items are produced.

An exotic sports car prob costs the same in materials as a Falcon, but is priced at 10-15 times the cost caus perhaps they only sell 10% of the qty that the Falcon would sell over the life of the model.

If I were running a car company, I would be using as much 'off the shelf' or existing parts as possible without compromising the appeal of the car.

I think I read somewhere that the tooling and RD for the doors of the AU were around the $50 million mark (and thus why they were carried over to the BA). Don't know how true that is, but when you hear of cars like the Commodore costing a billion dollars to develop you start to wonder how many millions are wasted for minor changes.

[JBomb3000]

Originally Posted by 4Vman

Id say take 20% off the RRP to get to the total cost of manufacture.
So on a 35K Falcon at list price it probably cost Ford 28K to make it...

The dealers would be buying them at least 20% of RRP if not cheaper depending on what incentives are being offered to the dealers at the time. Ford would have to be making a further 10% profit on that so i'd think the cost of manufacture would be around 30% - 35%

[ED Classic]

Originally Posted by ratter

Dealerships can make next to no money if you have bargained them down a bit, that's why they try to sell you finance and aftercare products to get some profit.

I cant think of a dealership in my city that hasnt done a millions of dollors showroom upgrade over the last few years i dont think they make that much out of labour intensive serivicing etc...they make profit on new cars beleive me

[China]

Don't beleive every thing you read in the paper or see on TV especialy that the car companies are making cars for nothing

[Donny]

back in the 90's when i worked for a holdon dealership all our staff could buy their new fullsize local cars for around 5k staff discount straight off rrp.
the principal was a pretty tight and shrewd operator, and i would guess he had another 2k or so profit margin in the base dunny doors, perhaps more as the models went up in fixture levels etc.

there isnt a lot in them margins wise from what i saw of my time at the dealership.

the biggest profits came from the service department that had 100 plus cars a day in and out of it every weekday (before workshops opened for weekends and nites).
spare parts allways does well, they sell to the retail public, to the trades as well, and also charge the service dept for all bits used in services, repairs etc, and the service dept bills the end customer full retail.
oh and dont forget the warranty dept was also a good avenue for money back too.

then add the used car lot, where a wily manager will wrangle every dollar out of a sale/trade, and the markups and GP amounts can be pretty impressive here too.

i noticed all that in the few years I worked at the dealerships.

And as someone said above, they make a killing on accessories like tow packs, mud flaps, louvers, shades, tinting etc etc, then add and warranties and finance.
Thats why they allways have a decent lookin chicks to sell all this stuff, suckers some men in nicely.

[1TUFFUTE]

yeah ive heard this for years an years. They seel them at a near loss and make the money up on pretty much the parts for the rest of the cars lifetime...more or less allowing for some other things aswell im sure...

[fordOwner]

Well if they get all their parts of "Genuine Ford Spares" about $100,000,000.......

I just wanna quickly say that is one of the funniest things i have read in a long time on here. On ya flappist! :hihi:

Carry on..

[Joe5619]

Originally Posted by FPV+fteT3

FYI: They have great accountants and probably get paid a bonus for each year they dont show a profit on the books this doesn't mean they dont make money. Losses on paper thru depreciation,amoritisation,GST,R&D etc all companies minimise and claim all they are entitled to and FOA would be no different.

1. I am an accountant. 2. GST is not a deduction, 3. Deprecation, amortisation & R&D are again not "free" money.. They are just deductions for money spent!!